Taking on debt has become a norm for most Americans, with the total debt by the population exceeding $13 trillion (Renzulli, 2018). This is partially due to the increased comfort level that people have with taking on debt. It is influenced by various factors including a social mentality that accepts credit card usage as an inherent part of Capitalism. Other aspects include lack of education or understanding about the intricacies of debt and the damage it could do if one is suddenly unable to make payments.
As the Federal Reserve continues to lead a strategy of increasing national interest rates, this impacts lower level consumers using credit cards. Many credit cards have interest rates that are connected to the prime rate, which varies based on the national interest rates. Therefore, it will become more expensive to maintain the credit balance one has accrued. Forbes magazine offers solutions to manage this problem if the issue becomes overwhelming, including a balance transfer, negotiations with the credit card company, or a personal loan (Clements, 2017).
Accumulating credit card debt is significantly easier than the challenge of paying it off. It is based on human psychology, which credit card companies manipulate for profit. It is extremely critical to use strategies and self-control which can protect you from overwhelming debt. This includes creating an emergency fund with any leftover monthly revenue, resisting the urge to spend it on personal desires. If a credit card should be used, one should only charge what you can afford to pay off that month, or two at the most. Furthermore, one should avoid cash advances and missing credit card payments as it will create additional interest and debt (Irby, 2018).
References
Clements, N. (2017). 3 strategies to deal with credit card debt in a rising rate environment.Forbes. Web.
Irby, L. (2018). 10 ways to avoid credit card debt. Web.
Renzulli, K. A. (2018). This is how much debt the average American has now—At every age. Time Money. Web.